Towards A Fair Economic Model for Co-Living Cooperatives
This model can be applied to any co-living cooperative project. The given example is for Camazotz Cohaven, Yucatan Mexico and hence named the Camazotz Economic Model.
The challenge being addressed is to create a cooperative system whereby contributors of different types receive fair return for their input.
We believe that is best achieved by the ‘operator’ (the person doing the actual hands on work) receiving the majority value created, with ‘investors’ serving more as crowdfunders with a good ‘return’ but no life-long claim on ‘equity’.
This is what we’ve arrived at so far.
Key:
CIR = Capital Investor Return
THP = Take Home Profit
CCT = Camazotz Cohaven Treasury
MCF = My Camazotz Fund
CEP = Camazotz Economic Program
CCP = Camazotz Cohaven Project
CCC = Camazotz Cohaven Council
Plan For Cooperative Revenue Distribution
version 1.2
After expenses to operate are accounted for, business owners share profits across 3 stakeholder groups.
- First is themselves, with a 60% of profit allocation as their personal ‘take home profit’.
- Second bucket is for ‘capital investor returns’ which includes anyone who invested into the business to get it started… which concerts to a ‘my camazotz fund’ bucket once investors are paid their 5x return.
- Third bucket is allocated to the overall Camazotz Community Treasury for allocation as goverened by the Camazotz Community Council.
Details
Investors can include the founder of the business, other Camazotz community members, or the Camazotz Community Treasury (CCT).
If the founder funded the business themself, the CIR is allocated to their MCF (My Camazotz Fund) once they have achieved complete payback for their investment.
The MCF is a segregated profit allocation that a business owner can use for any CEP (Camazotz Economic Program) of their choosing.
The Camazotz Economic Program includes business investment or community donations to help improve the quality of life for all Camazotz community members, via collective and individual choice of where best to allocate money. The CEP includes the CCT (Camazotz Cohaven Treasury) and all member MCF’s (My Camazotz Funds).
Examples
Example 1: Business Owner — Fully Funded
I am a Camazotz member and want to open a Camazotz Gym. I fund $20k to buy the equipment and build the gym.
I receive 100% of the profits until I have recovered the $20k capital investment.
Once payback is achieved, I then receive 60% THP plus 20% of the business profits into my MCF which I can use to fund or donate to any Camazotz Cohaven Project of my choosing. The remaining 20% profits goes to the CCT (Camazotz Cohaven Treasury).
Example 2: Business Owner + Capital Investor
I open the same Gym business but in this scenario I fund $10k and receive $10k from capital investors (which might be the CCT or community member MCFs or other patrons).
In this case I receive 60% THP plus 50% of the CIR (capital investor returns) because I funded 50% of the $20k. This continues until 5x return is received for funders (which includes my self and all others).
Once 5x return is achieved for funders, the complete CIR bucket of 20% reverts to MCF (My Camazotz Fund), and the remaining 20% profit goes to the CCT.
Capital Investor
Let’s look at it from the investor perspective. The investor needs to decide what % of funding to provide that feels comfortable for them based on the risk vs reward of the business.
If they have the option to, would they want to provide 100% of the capital required to start the business (such as the $20k for my Gym), and therefore receive all of the 20% CIR bucket until they are paid a 5x return ($100K), knowing the business operator (me in this case) has no ‘skin in the game’ except for being there on-site or on-line to operate the business and receive the 60% THP?
These are scenarios that will be decided on a case-by-case basis as we begin to build the economic facilities and opportunities at Camazotz Cohaven.
Camazotz Cohaven Treasury
The treasury (CCT) is used to fund all areas of maintenance and development of Camazotz Cohaven towards our purpose, as per the Camazotz bylaws.
Administered by the CCC (Camazotz Cohaven Council) comprised of delegates selected by the community, as per the Camazotz bylaws.
(We are using Sociocratic Governance (see Sociocracy for All) along with the Eden Election (delegates and Eden Fractal (recognition) processes to aid our council development.)
Notes
The purpose of capital investments (funding) is not to create ongoing profit centres for funders. It is to help us achieve our collective goals as outlined in the Camazotz Bylaws.
As such, rather than equity owner investments, we are collectively crowdfunding the Camazotz project via the co-operative structure. All capital funding is used to buy profit making resources such as equipment for Camazotz. Think of it as a ‘loan’ with a 5x return. With this appraoch there are less legal expenses for everyone too.
A 5x return on capital contributions to Camazotz businesses provides an attractive return in exchange for funding economic development of Camazotz.
This allows profits beyond the 5x return to be allocated back to the business operator / founder via their MCF (my camazotz fund) allowing business owners to support the CEP (camazotz economic program) via fund contributions to new projects.
We believe this puts us into a synergistic spiral of success.
Questions on a postcard.
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